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Cantel Medical Reports 75% Increase in Net Income - EPS of $0.23 vs. $0.13 for Quarter Ended January 31, 2009

Friday, October 16, 2009 General News J E 4
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LITTLE FALLS, N.J., March 9 CANTEL MEDICAL CORP. (NYSE: CMN) reported a 75% increase in net income to $3,774,000, or $0.23 per diluted share, on a 2.5% increase in sales to $62,420,000 for the second quarter ended January 31, 2009. This compares with net income of $2,157,000, or $0.13 per diluted share, on sales of $60,910,000 for the second quarter ended January 31, 2008. For the six months ended January 31, 2009, the Company reported a 74% increase in net income to $7,107,000, or $0.43 per diluted share (inclusive of $0.02 of expenses related to the relocation of its Dutch manufacturing operations to the United States), on a 5% increase in sales to $126,826,000. This compares with net income of $4,096,000, or $0.25 per diluted share, on sales of $120,915,000 for the six months ended January 31, 2008.

Andrew Krakauer, Cantel's President stated, "We are very pleased to have delivered another quarter of substantial earnings growth and our strongest quarterly performance of the past few years. These positive results confirm the continued success of our sales and marketing investments and various initiatives to improve operating margins. Cantel demonstrated sales growth in all reporting segments except for Water Purification and Filtration which was affected by some delayed capital sales and an unusually favorable comparative quarter in the prior year."

Krakauer added, "While all our businesses performed well, operating income in our Endoscope Reprocessing and Dialysis units was substantially ahead of last year, aided by strong sales of consumables, including disinfectants, sterilants and an increase in service revenue. Additionally, the positive performance was helped by our active cost reduction and margin improvement programs, the implementation of price increases and reduced interest expenses."

Krakauer continued, "Although our businesses are not immune to the economic downturn, we remain focused on our strategies to grow and improve performance. In this economy, our competitive advantage is our leadership positions in several infection prevention and control markets, a quality reputation and strong brands. Further, we have proactively developed our business to where approximately 70% of our sales come from disposables and service, which are supported by a large installed base of equipment."

The Company further reported that its balance sheet at January 31, 2009 included current assets of $85,728,000, including cash of $20,052,000, a current ratio of 2.4:1, debt of $54,300,000, stockholders' equity of $171,838,000 and a ratio of funded debt to equity of .32:1. Krakauer stated, "The Company has a strong balance sheet and continues to generate significant cash. Our cash provided by operating activities for the quarter was $7,801,000. We have reduced our net debt position from the first quarter by 18% to $34.2 million, which is less than one (1x) turn of our trailing EBITDAS."

Cantel Medical Corp. is a leading provider of infection prevention and control products in the healthcare market. Our products include specialized medical device reprocessing systems for renal dialysis and endoscopy, dialysate concentrates and other dialysis supplies, disposable infection control products primarily for the dental industry, water purification equipment, sterilants, disinfectants and cleaners, hollow fiber membrane filtration and separation products for medical and non-medical applications, and specialty packaging for infectious and biological specimens. We also provide technical maintenance for our products and offer compliance training services for the transport of infectious and biological specimens.

The Company will hold a conference call to discuss the results for the second quarter ended January 31, 2009 on Monday, March 9, 2009 at 11:00 AM Eastern time. To participate in the conference call, dial 1-877-407-8035 approximately 5 to 10 minutes before the beginning of the call. If you are unable to participate, a digital replay of the call will be available from Monday, March 9 at 2:00 PM through midnight on March 10, by dialing 1-877-660-6853 and using passcode #286 and conference ID #315449.

The call will be simultaneously broadcast live over the Internet on vcall.com at http://www.investorcalendar.com/IC/CEPage.asp?ID=142021. A replay of the webcast will be available on Vcall for 30 days.

For further information, visit the Cantel website at www.cantelmedical.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties, including, without limitation, the risks detailed in Cantel's filings and reports with the Securities and Exchange Commission. Such forward-looking statements are only predictions, and actual events or results may differ materially from those projected or anticipated.

EBITDAS is a measure of the Company's performance that is not required by, or presented in accordance with, Generally Accepted Accounting Principles ("GAAP"). EBITDAS is a non-GAAP financial measure defined by the Company as income before interest, taxes, depreciation, amortization and stock-based compensation expense. The Company believes EBITDAS is an important valuation measurement for management and investors given the increasing effect that non-cash charges, such as stock-based compensation, amortization related to acquisitions and depreciation of capital equipment, has on the Company's net income. In particular, acquisitions have historically resulted in significant increases in amortization of intangible assets that reduced the Company's net income. Additionally, the Company regards EBITDAS as a useful measure of operating performance and cash flow before the effect of interest expense and complements operating income, net income and other GAAP financial performance measures. Generally, a non-GAAP financial measure is a numerical measure of a Company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. This measure, however, should be considered in addition to, and not as a substitute or superior to, net income, cash flows, or other measures of financial performance prepared in accordance with GAAP.

CANTEL MEDICAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Three Months Ended Six Months Ended January 31, January 31, ----------- ----------- 2009 2008 2009 2008 ---- ---- ---- ---- Net sales $62,420 $60,910 $126,826 $120,915 Cost of sales 38,809 39,424 79,592 78,223 ------ ------ ------ ------ Gross profit 23,611 21,486 47,234 42,692 Expenses: Selling 6,992 6,836 14,342 13,625 General and administrative 9,037 8,967 18,061 17,924 Research and development 983 961 2,048 1,951 ------ ------ ------ ------ Total operating expenses 17,012 16,764 34,451 33,500 ------ ------ ------ ------ Income before interest and income taxes 6,599 4,722 12,783 9,192 Interest expense 674 1,255 1,425 2,477 Interest income (38) (150) (108) (297) ------ ------ ------ ------ Income before income taxes 5,963 3,617 11,466 7,012 Income taxes 2,189 1,460 4,359 2,916 ------ ------ ------ ------ Net income $3,774 $2,157 $7,107 $4,096 ====== ====== ====== ====== Earnings per common share - diluted $0.23 $0.13 $0.43 $0.25 ====== ====== ====== ====== Weighted average shares - diluted 16,415 16,386 16,382 16,359 CANTEL MEDICAL CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) January 31, July 31, 2009 2008 ---- ---- Assets Current assets $85,728 $84,561 Property and equipment, net 36,248 37,920 Intangible assets 37,972 41,254 Goodwill 111,860 113,958 Other assets 1,084 1,497 ------- ------- $272,892 $279,190 ======== ======== Liabilities and stockholders' equity Current portion of long-term debt $9,000 $8,000 Other current liabilities 27,438 30,922 Long-term debt 45,300 50,300 Other long-term liabilities 19,316 21,256 Stockholders' equity 171,838 168,712 ------- ------- $272,892 $279,190 ======== ======== SUPPLEMENTARY INFORMATION Reconciliation of Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-Based Compensation Expense ("EBITDAS") The reconciliation of EBITDAS with net income for the three and six months ended January 31, 2009 and 2008, respectively, is as follows (in thousands): Three Months Ended Six Months Ended January 31, January 31, ----------- ----------- 2009 2008 2009 2008 ---- ---- ---- ---- Net income $3,774 $2,157 $7,107 $4,096 Income taxes 2,189 1,460 4,359 2,916 Interest expense 674 1,255 1,425 2,477 Interest income (38) (150) (108) (297) Depreciation 1,525 1,530 3,075 2,975 Amortization 1,268 1,460 2,606 2,859 Loss on disposal of fixed assets 8 49 22 49 ------ ------ ------ ------ EBITDA 9,400 7,761 18,486 15,075 Stock-based compensation expense 525 462 1,045 994 ------ ------ ------ ------ EBITDAS $9,925 $8,223 $19,531 $16,069 ====== ====== ======= =======

SOURCE Cantel Medical Corp.
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